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 British film-makers are unable to decide whether to raise a toast to Gordon Brown or bay for his blood. The Chancellor has closed a tax loophole, potentially costing the industry millions of pounds, while introducing a new tax credit which will give an as yet unknown amount back to film-makers.
Producers, investors and accountants have been hit by a spate of changes to the tax system, the most jarring of which was the abolition last month of "sideways loss relief" - a tax allowance that had formed the backbone of a recent boom in British film.
The question at the heart of the debate is whether the new, as yet untested tax credit will compensate for the loss of the allowance.
Without the relief, producers fear a mass exodus of investors such as Future Films, Ingenious Media and Scion, which have been ploughing millions into British film. Ingenious is already thought to be considering a complete pull-out, having been criticised for abruptly withdrawing more than £1 million from the new St Trinian's film two weeks before the start of shooting.
The tax credit is likely to continue to attract US investment to big UK studios. However, independent producers, who are less likely to get money from abroad, fear that it will not provide as much cash as they have grown used to receiving.
So the feeling in the industry is that the Chancellor's move will have a contradictory effect - potentially boosting the UK's international film presence but damaging grass roots creativity.
The industry admits that the tide of good fortune has been in no small measure down to wealthy investors.
Producers are also confused by how the credit - which gives back 16 per cent of costs on films worth more than £20 million and 20 per cent on those costing less - will work.
Tim Willis of PACT, the trade association for independent film, says: "There has been a whole series of blows over the years that have made it tough to piece together financing. The industry will adjust to this one, but it's hand-to-mouth and some may not survive."
While there is tentative hope that the credit will create certainty, there is anxiety that it may fail in practice. Producers are worried, for instance, that banks, wary of risk, may not be willing to provide up-front cash.
Full story published in The Times
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